Suppose the Elasticity of Supply of Land Is 0 and Elasticity

question 29

Multiple Choice

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then

• A) buyers and sellers each pay 5 percent of the tax.
• B) buyers pay all of the tax.
• C) sellers pay all of the tax.
• D) sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax.
• E) buyers pay 1/2 of the tax.

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Definitions:

Experience-curve Pricing

A pricing strategy that lowers the cost of a product over time as the production processes become more efficient with experience.

Experience-curve Pricing

A pricing strategy based on the concept that costs decline and efficiency improves over time with accumulated production experience.

Experience-curve Pricing

A pricing strategy based on the idea that costs per unit decrease with increasing scale of production due to gained efficiencies and experience.

Cost-plus-percentage-of-cost Pricing

A pricing strategy where the selling price is determined by adding a specific percentage of profit margin to the total cost of the product or service.